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Deflation causes problems. Better to inflate wages in correspondance with prices.

• mozumder 8y ago
  It only really causes a problem if you don't prepare your economy for it. Prices should really only drop for commodity products and basics, so that one can live for $100/month. You should still offer incentives for people to spend more, such as offering higher end real-estate and products, or just bringing in more people into your economy.
  • xapata 8y ago
    What mechanism causes this deflation for commodities and basics? How much of the economy is basics?
    • mozumder 8y ago
      Efficiency and automation reduces commodity prices. Just transporting food is a huge cost. Get transport costs down and you reduce food costs.
  • walshemj 8y ago
    I causes people to delay spending and horde rare goods (gold etc) it also has massive problems if say 90% of your populations mortgages are underwater see Japan